Avaya Fuels Digital Transformation Plans

Acquires cloud contact center provider Spoken for platform on which it can build a differentiated customer experience.

Avaya Engage kicked off Monday in New Orleans, a fitting location for the annual customer and partner event -- with its bankruptcy in the rear-view mirror, the company can look forward to better times and finally party like its Mardi Gras.

Avaya Engage kicked off yesterday, Mardi Gras-style

In kicking off Engage, Avaya issued a press release with the headline, "Avaya Engage 2018 Reveals Avaya's Vision for the Next Wave of Digital Transformation." In the press release Avaya doesn't explain what the "next wave" will be, but digital transformation initiatives revolve around improving customer experience and fueling worker productivity, so aligning its strategy around digital transformation makes sense. Avaya made a bigger splash yesterday with a second press release, announcing it had entered into a definitive agreement to acquire cloud contact center provider Spoken Communications. Spoken, with which Avaya has a year-old BPO cloud partnership, gives Avaya an excellent platform to create a differentiated customer experience.

The Stuff of Winners
Many industry experts view customer experience to be the thing that will determine the winners and losers of the future. The Walker Group, Gartner, and others have predicted that by 2020 customer experience will overtake everything as the top brand differentiator. However, survey results from cloud contact center vendor Five9 show that great customer service is already the top factor -- meaning, IT and business leaders need to focus on it now.

A lot obviously goes into creating a great customer experience, but the contact center is often the starting point. However, just having a contact center isn't enough. Agents need the right toolkit to give customers an experience that delights. Today that means omnichannel support, but that's rapidly becoming table stakes -- the minimum required to be competitive. What comes next will be markedly different than what we have today, and will shake up the contact center landscape.

Artificial intelligence (AI)-based platforms will drive the next wave of contact center interactions, leveraging data from sources such as interactions, social media, Internet of Things devices... and almost anything you might think of. Ultimately, contact centers will shift from being something that reacts to customers calling in to something more proactive based on available contextual information. For example, if you happen to have one of those newfangled smart refrigerators that's connected to your home network, you don't have to remember when to change your water filter. Rather, the refrigerator can send an alert to the water filter maker's contact center when the water filter needs replacing, and you can receive a call or text message asking if you'd like to order a new one.

Cloud Imperative
If contact centers are indeed going to evolve into something that understands the end-to-end customer journey and become predictive in nature, the platform needs to move off premises and into the cloud. In this case, a cloud-based solution isn't something that's just a cheaper and faster alternative of what's on premises. Instead, it's doing things that would be very difficult to replicate with a legacy solution.

The cloud offers massive scalability and processing capabilities as well as the resiliency required to process the insane amounts of customer data being created today. As we become more mobile and connect more things to our networks, the volume of data will keep growing. Data can be centralized in the cloud, making analysis easier and more accurate. Juxtapose this with legacy solutions in which the data is scattered across several sites, bogging down analysis.

I also think we'll start seeing the introduction of virtual and augment reality into customer interactions, and that will further drive the need for centralized information. The goal for every business should be to use the cloud to do things it couldn't do before instead of using it to do things a bit cheaper or faster. This was the exact point I made earlier this month in the "Cloud Communications 2021: Your Strategic Plan" webinar sponsored by RingCentral and hosted by Enterprise Connect and No Jitter (listen on demand).

Avaya has done a lot of good things recently to improve its cloud position in UC, as discussed in this recent No Jitter post, but it's lacked a solution for its contact center businesses. Avaya customers faced the decision of sticking with the old or upgrading to the new by switching vendors, as I pointed out when writing about Avaya rejoining the capital markets. In that recent post, I show the stark disparity in revenue and market cap for companies aligned with the cloud. For example, Five9 has only one-tenth the revenue of Avaya, yet its market cap is about half.

Speaking Volumes
I like the approach Avaya has taken in this market. The company has always been a great engineering vendor, and I'm sure it could have spent the R&D cycles to build its own platform. By the acquisition, CEO Jim Chirico shows he isn't just talking the talk of wanting to be all-in on cloud and the need to move faster. Buying Spoken gives Avaya a solution now, an important factor since the market has already begun to move to the cloud, although we are in the very early stages of the transition.

Avaya needs to show it can grow consistently. Spoken creates a massive opportunity for Avaya, which will now be able to grow simply by flipping its own on-premises base to the cloud. If it happens to take some share from the other legacy vendors, even better. This is a similar approach to what Mitel is doing with the cloud platform it acquired in the ShoreTel acquisition.

Going public and reducing the debt has given Avaya something it hasn't had in a long time, and that's some capital to use to fuel growth. I'm happy to see it act so quickly to plug what was perhaps the biggest glaring hole in its product line.Now it comes down to execution, and getting Spoken integrated into Avaya as fast as possible. Avaya has been the biggest share donor to the likes of 8x8 and RingCentral in UC and Five9 in the contact center. The competitors aren't going to back off, but at least now it's got something to punch back with.

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